Page 71 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

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capacity of about one billion shock absorbers per annum. It also makes telescopic front
forks for two-wheelers, and has a bearings division manufacturing a complete range of bi-
metal bearings, flanges, and washers. These bearings cater to the requirements of the
railways, the marine, and the power industries. Sephantu looks at them as related
diversifications, and sees nothing wrong in focusing on those segments too…
You are now dependent on a solitary end-user industry, but have a captive clientele. All
you need to do is to maintain the relationships with your buyers, work closely with them,
and be an integral part of their value-chain. I can see your reservations about the need to
evolve a strategy at Auto Components…
As Lalit mentioned, Auto Components enjoys a preferred supplier status with 5 leading
OEMs in the country. We get technical and financial assistance from our partners. They
encourage outsourcing and some of their clients have become global sourcing-centres.
We have access to their Total Quality manuals and Management Information Systems,
like the Spider Web Charts. It is a symbiotic relationship, and both partners tend to win.
When the market is assured, production is predictable, the customer list is captive, and we
have a single-product orientation, why do we need to plan 5 years in advance? After all,
we will continue to enjoy the benefits of bonding. Auto Components can easily operate
through Management by Objectives and annual budgets – as it has been doing in the past.
Our planning schedules are linked to the plans of our customers. We don’t need a separate
strategic planning process at Auto Components…Yes?
It is worthwhile recalling the introduction of the concept of strategic planning in the West.
The interest in strategy was caused by the realisation that the external environment was
becoming progressively discontinuous with the past. Objectives and annual targets alone
were no longer adequate as tools of managerial initiative. Strategy was important because
a company needed direction in its search for, and the creation of new opportunities. You
had to identify your core strengths as part of developing and business strategy…
Core has little relevance in a business like ours. That is, if you mean a unique attribute
which straddles several segments, markets and products. A two-wheeler company would
view itself in the transportation business, and a petroleum company would categorise
itself as an energy business. But there is no common core capability as far as our single-
product business is concerned. There is no common thread I see that can link our present
and future product-markets…
I think you are mistaken. Objectives represent the ends that the company seeks to attain.
Strategy is the means to achieve those ends. It provides the roadmap…

I thought as much. That is why I took the next step: enlisting the help of an outsider. We
short listed 2 consultancy firms, Strategic Consultants, a transnational company, and
Transformation Consulting, a local firm, and asked them to submit proposals for
formulating a strategy, and to help us implement it at Auto Components. Teams from
both the firms have spent several hours with us, and submitted their reports. The contrast
in their approach to strategic planning is striking…
How does your father view the need for strategy? After all, he was the one who built the
company…
He is sceptical. He feels that strategy is fine for large corporations with diversified interests,
but doesn’t make much sense for Auto Components. He often says that nothing works
better in business than gut feel – his ultimate touchstone. The rest is all frills, serving no
more than an ornamental purpose. I am less sceptical and more open to the idea. I feel that
it is imperative for us to know where we will be 5 years from now; it will help us work
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